AdExchanger.com: How's CPX Interactive's display ad business? Any trends that you can share?

MS: Our display business is strong, we are continually seeing growth not only in terms of revenue but in terms of impressions served. Obviously, seeing revenue growth in this economy is becoming less common.

One of the things that makes us more comfortable in these tougher times is the diversity of our clients. Interestingly, we are noticing that consumer goods in the $100 and under range are still selling fairly well in this market, but big brands are pulling back more and more on spending. It also seems that direct marketers who’s revenue is generated before they pay for media are spending more then those direct marketers who have to frontload their CPA to earn residual money over the lifetime of a user.

Please provide a bit of background on CPX's use of ad exchanges. Why are exchanges important? Any exchanges "getting it right" these days, in particular?

We have embraced the model since its inception. We were one of the earliest (and remain one of the largest) players in the Right Media Exchange. We have also been happy to be beta users in most of the other exchanges that have popped up. We buy some extra inventory for our network through them all and allow them to buy on us to increase the cpm we provide for our publishers. It is probably still too early to say if anyone is getting it right as we don’t really know what right is yet. Ultimately, though, anything that makes the market more liquid is a good thing.Has CPX used real-time bidding (RTB) or demand-side optimization yet? Is RTB a "big deal" in your view?

We do use some RTB with a few publishers. I think it certainly helps competitive networks step up their game. As to whether it is a “big deal”, it can be, but today I don’t think there are enough players using it for it to be a “big deal” . Someday when you have 20+ networks and hundreds of publishers using it, it will be a really big deal.

Are you using data exchanges? Can data exchanges help the marketer? Any challenges?

We do use some data exchanges like Blue Kai. Whether they help our bottom line really depends on what data we are buying and how relevant it is to the campaign. Unfortunately, while it can provide decent lift in revenue, with the cost of the data, it can often end up being a wash.

It would probably be better for us if they pitched their services directly to the advertisers, and the advertiser paid for the data before they came to an ad network. With the model as it is now, I think ad networks will begin to think more creatively about how they can create their own data and push the value-add to their bottom lines.

With many trading platforms and services either in stealth mode or already available - such as Invite Media and Media Math - how will CPX compete? Have you built your own platform to aggregate across multiple exchanges or have you/will you outsource?

These kinds of platforms can definitely benefit agencies by providing a window into our inventory, but at the end of the day it’s all about scale for us so CPX really remains in control of its own destiny. CPX manages over 30+ billion impressions monthly and 80% of those are direct and not from any exchange. Regardless of what platform an agency or advertiser uses, they need to come to CPX to buy that direct inventory. We are currently plugged into multiple campaigns and will shortly be able to provide better granularity across those platforms then these other service providers.Is there value in placement? Or, is it all about audience?

There is absolutely value in placement and …yes it is all about audience. Great placement in front of the wrong audience is irrelevant and bad placement to the perfect audience will be equally useless. Both are truly needed to deliver real value.

Are view-through conversions an accepted metric by clients/CPX? How does attribution get solved going forward? Any thoughts on the ability to map to offline, too?

Most of the time, on high priced DM campaigns, view-through conversion is acceptable. Of course, the problem is the attribution. Our numbers often show 80% discrepancies on view-through conversions, so the question remains, “who is getting that credit and what value did our impression add to that sale?” I believe that, in the long term, we will be able to validate that as well as validate offline purchases through online media. Meanwhile, hybrid models are probably the best way to combat this in the near term, until a better analysis tool is created.

Some ad networks probably do cannibalize publisher inventory. We often discuss, at CPX, that publishers tend to be the forgotten part of the equation in the industry. Their inventory is may be taken for granted and commoditized. We like to think that CPX is different, though. Carlton Hickman (CPX co-founder) and I were publishers, ourselves, before we began what became CPX. We have always understood the integral role that publisher inventory plays in the process and the importance of being able to convince publishers that you truly understand their bottomlines and speak their language. We have always paid top dollar for quality publisher inventory. Without it, after all, no ad network has a ‘product,’ so we strive to create the highest ecpms we possibly can for our publishers and ensure that we are buying competitively.

How do you see digital media buying agencies evolving? What recommendations would you make to the agency side?

As advertising budgets move more quickly from TV and print to online, traditional agencies are going to have to be better prepared to play in this part of the industry. Obviously, many large agencies are already successful in the space and I think we will see more following suite. My suggestion would be that they do their best to truly understand the factors that make online media buying different from the more traditional models, rather than simply applying old rules to the newer medium. We have been pretty successful in helping the agencies we work with along their learning curves.If you were a young digital marketer, where would you focus your training? Any tips?

At the risk of sounding self-serving, I would truly suggest that any digital marketer seek a better understanding of how they can leverage the scalable distribution of a quality ad network. There have been (and still are) issues that must be resolved so that all parties can achieve total comfortability with the process, but the truth is that the promise of the Internet is really the delivery of scalable targeted audiences. To maximize this strength, digital marketers must build a partnership with a company that can execute on that promise.

4 Comments

great article and i enjoyed Mike's thoughts especially when it comes to data exchanges although i question if direct marketers are willing to spend. I also wonder why its strictly a decent lift and not a significant one instead. Is it specific to the campaign or data?

I can't tell you if direct marketers will be willing to spend or not, only time and ROI will tell long term. It's a decent lift because that is what we have seen historically, I cannot speak for other networks and advertisers using them, but for us, that is what we have seen. Finally yes, I am talking specific to certain campaigns, maybe we have yet to see the right campaign that will get significant lift from data exchanges.